Mich. governor front, center in Detroit bankruptcy

By DAVID EGGERT - Associated Press

July 20, 2013

Carlos Osorio

Caption

Michigan Gov. Rick Snyder addresses reporters during a news conference Friday, July 19, 2013 in Detroit. Seven governors came and went during the decades-long decay of Michigan's largest city that culminated with a humiliating collapse into financial ruin. It's the eighth, former business executive and relative political novice Snyder, who is aggressively tying his legacy to the prospects of a Detroit turnaround. (AP Photo/Carlos Osorio)

DETROIT (AP) — Seven governors came and went during the decades-long decay of Michigan's largest city that culminated with a humiliating collapse into financial ruin.

It's the eighth, former business executive and relative political novice Rick Snyder, who is aggressively tying his legacy to the prospects of a Detroit turnaround.

When he took office, Snyder pushed for more powers for the state to intervene in distressed cities and schools. After voters repealed the law last November, he ignored critics and signed another one. He also hired the city's turnaround specialist and, nearly four months later, blessed the request to file for bankruptcy.

For the man with the "one tough nerd" moniker, it's the latest bold decision in a 2 ½-year stretch that's remarkable for the sheer breadth and pace at which Snyder has moved. He's again in the national spotlight just a half-year after making Michigan — the bastion of the auto industry and organized labor — a right-to-work state, a move that pollsters say led a drop in his approval ratings.

Though the impact of the bankruptcy filing on Snyder's 2014 re-election may be difficult to predict, it's still a legacy definer that's being watched not only in Michigan but also by Wall Street and other elected officials across the country.

Snyder, a former venture capitalist and computer company CEO, has no known presidential aspirations.

"I don't spend time dwelling on my legacy. I just try to do my job well," the Republican governor told The Associated Press in an interview. "That's relentless positive action. No blame, no credit. Just simply solve the problem.

"Here was a problem 60 years in the making. The can was being kicked down the road for far too long. It was time to say enough was enough. Let's stop, let's stabilize, let's grow."

Detroit's bankruptcy could last at least through summer or fall 2014, when Snyder is expected to ask voters for another term.

"I deeply respect the citizens of Detroit," he said. "They along with the other 9 million people in our state hired me to do this job. They're my customers. This was a tough step, a difficult decision, but it's the right decision."

The first-term governor, perhaps more than any other state's chief executive, hasn't been afraid to confront mounting retiree pension and health care costs hampering state and city budgets. He's done that mainly by signing laws making public workers pay more of their health costs, ending retiree health care for new hires and enticing teachers to contribute more toward their future pensions.

But the stakes could be higher with the Detroit intervention under Michigan's emergency manager law.

Eric Scorsone, a Michigan State University economist and expert on government finances, said while Snyder helped revise the law to make it one of the toughest in the country, bankruptcy likely was inevitable even under the old law — unless creditors had voluntary agreed to accept far less than what they're owed.

"Other governors may have taken different approaches. But even under the old law, if we had a different governor, it's pretty obvious something would have had to be done," he said.

Scorsone said many other U.S. cities have issues similar to Detroit, though not on the same scale. Other states will be watching to see what happens in part because Snyder — not local elected officials — is taking responsibility for improving public safety and other basic needs, he said.

"I think it's aggressive in the sense that most states don't intervene in local affairs to the same extent," Scorsone said.

Lansing Mayor Virg Bernero, a Democrat who lost to Snyder in the 2010 election, said Snyder "definitely" deserves credit if Detroit emerges in better shape, especially in providing everyday services.

"It's bold and decisive. You've got to give him credit, however late," Bernero said, adding that Snyder should have intervened in Detroit within three months of taking office in 2011.

"There was a sense of inevitability about this bankruptcy," Bernero said. "I would have moved quicker with an emergency manager. The ship couldn't right itself. Why prolong the agony? Lance the boil and move on."

Snyder first struck a consent agreement in April 2012 with the Democratic-led Detroit to wipe out its enormous budget deficit and mountainous debt but appointed Kevyn Orr as emergency manager after that didn't work in part because local officials

Steven Rattner, who was chief adviser to President Barack Obama's auto bailout task force, said from his detached vantage point in New York, Snyder "has handled this thing quite well."

While acknowledging the political difficulties associated with anything viewed a bailout, Rattner questioned why the state and possibly the federal government aren't offering Detroit a rescue package.

"It's not logical for there to be political fallout from putting Detroit in bankruptcy because there's no other alternative to that," Rattner said. "The question people can ask is whether Snyder is offering all the help the state of Michigan can offer. ... These are tough politics either way."

There seems little appetite from either Democrats or Republicans in Washington for a federal rescue of Detroit. Bailing out the city with state money could bring resistance in the Republican-led Legislature and prompt anger from out-state residents concerned about funding their own schools and local services.

"There are so many great things going on in Detroit. We resolve the city government issue, Detroit's really well poised to see outstanding growth take place when people can say there are better services," Snyder said. "We're going to get there."